Leasing plane to flight school / finding half owner

[Animosity2k]

So I've come to the decision I don't fly my airplane anymore enough to warrant owning an airplane worth over $100k. I fly maybe 35-40 hours a year total. Has anyone leased their plane to a flight school? How did you go about finding one interested? Also if I split the ownership how do I block myself of any liabilities in the case of an accident? I'd love to split the ownership ideally between one other person, still have access to a nice plane when I want that I know is maintained well.  Thanks for any thoughts. 

[Madhatter]

40 to 50 hrs a year is average for a lot of GA. If you want your plane trashed then let students fly it. I see this a lot on my field with a lot of leased planes. 

[Animosity2k]

1 hour ago, Madhatter said:

40 to 50 hrs a year is average for a lot of GA. If you want your plane trashed then let students fly it. I see this a lot on my field with a lot of leased planes. 

Any idea the liability I open myself to if I split ownership?

Thanks! 

[Madhatter]

With all the lawyers looking for money everything has liability,  that's why I don't sign any logbooks except mine for annuals or anything. Even the FAA agrees with me on that, the individual FAA inspector even has liability now with the new rules. Their new FAA handbook says they may or may not be defended depending on the issue.

[sandpiper]

I fly mine 50-60 hours a year. It relaxes me and gives me great pleasure. As long as I can afford it and fly safely, I won't sell it. I can't monetarily justify it but I don't care.

Piloting an aircraft has been part of my life since 1965 so I know my time is coming to an end. Could be tomorrow, could be in 10 years.

Good luck with whatever you end up doing but I sure would't lease to a flight school. My experience is that most people who don't own a plane don't have any concept about maintenance or repair costs. Some do but just don't care.

[Mike Koerner]

First, as for your legal questions, you might try contacting AOPA. They can at least point you to knowledgeable articles on the subject.

With respect to rental, I have idea. All across the country, thousands of young pilots are attempting fill openings Covid left in our commercial pilot ranks. They have their training and licenses, now they need 1500 hours (stupid law). Lots of them are instructing or flying jumpers or tow planes, but there aren't enough of those jobs to go around.

So, my idea is:

1) Figure out what your plane costs per hour... and what it's worth on the market, which I think will be higher. I think a CT is a cheap way to fly. It has been for me anyway.

2) Go to one of the active training schools. Ask around. Find one or two pilots that are interested in building time in your plane and form a partnership with them as owners. Again, AOPA can help you do this. The partnership agreement involves not only an equity stake but also an hourly usage charge. The advantage of this over a lease-back is that they are not students. They have instrument, commercial and multi-engine ratings. And their shared ownership gives them a stake in caring for the plane. Once they get their hours they'll want out. Hopefully, you've structured the partnership agreement to allow that, and allow you to go find another partner.

[Animosity2k]

15 hours ago, Mike Koerner said:

First, as for your legal questions, you might try contacting AOPA. They can at least point you to knowledgeable articles on the subject.

With respect to rental, I have idea. All across the country, thousands of young pilots are attempting fill openings Covid left in our commercial pilot ranks. They have their training and licenses, now they need 1500 hours (stupid law). Lots of them are instructing or flying jumpers or tow planes, but there aren't enough of those jobs to go around.

So, my idea is:

1) Figure out what your plane costs per hour... and what it's worth on the market, which I think will be higher. I think a CT is a cheap way to fly. It has been for me anyway.

2) Go to one of the active training schools. Ask around. Find one or two pilots that are interested in building time in your plane and form a partnership with them as owners. Again, AOPA can help you do this. The partnership agreement involves not only an equity stake but also an hourly usage charge. The advantage of this over a lease-back is that they are not students. They have instrument, commercial and multi-engine ratings. And their shared ownership gives them a stake in caring for the plane. Once they get their hours they'll want out. Hopefully, you've structured the partnership agreement to allow that, and allow you to go find another partner.

Any examples of the contracts in example #2. 

[Animosity2k]

Also sure would help if my plane was setup for IFR flying... ;/ 

[Anticept]

I can speak as someone from both sides.

First and foremost, leasing aircraft to flight schools enables one of two things:

• You can now afford to own an airplane
• You can now afford a better airplane than you could before.

Notice I never said anything about making money. It's possible, but the thing is, flight schools have gotten very good at shifting the burden to owners. It's like a hedge fund who manages your money: even if they go bankrupt next week, the hedge fund managers aren't on the hook unless it's in your contract (it won't be) or they were grossly negligent and broke laws. So if your airplane starts developing issues all of a sudden, don't expect the school to come to your rescue even though they profited from your lease. You'll be left holding the bag.

No matter what, in order for an airplane to actually be profitable, you have to stay on top of the day to day things. Or get really lucky and find someone who is willing to. You need to know when to say "This is unacceptable how you are treating it" and when to cut your losses if it starts going in a direction you don't like. Your presence keeps people honest in an industry where there is a LOT of people who would grin ear to ear with you showing up, dropping it in their lap, and expect them to manage it reasonably.

If management isn't willing to take pride in your airplane, and you aren't willing to take pride in it, sure as hell students won't give a flying rats ass either. You have to stay on top of it and be willing to walk away.

Now regarding partnership agreements: NEVER ENTER INTO A PARTNERSHIP AGREEMENT WITHOUT A STRAIGHTFORWARD WAY OUT. The problem with partnerships is it takes a market as big as a basketball, and shrinks it down to one the size of a pellet. When it comes time for you to sell your share, you are going to absolutely struggle. Been there, done that, ended up having to take a significant cut in value to move it and that's after the lawyers got involved.

If anything, I would rather start an equity based flying club, than start an equity partnership. The nice thing about flying clubs when they're run as a proper equity based organization, is that it's much easier to get out of it than say, a third share of a 182. The shares are much smaller and more in reach of people than airplane partnerships.

So to wrap all this up, if you do lease your airplane, you need to be very clear on how things will work, and be involved with that organization or have someone you trust with your best interest be there.

Oh and, do not cheap out on insurance. Absolutely do not cheap out on insurance!

[Tip]

A friend put his in a flight school that you are very familiar with. He paid monthly hangar rent and the plane was push outside everyday, rain or shine so that the hangar was open for maintenance. When I picked it up, the footwells were full of water. Is wasn’t a good situation.

[Animosity2k]

1 hour ago, Tip said:

A friend put his in a flight school that you are very familiar with. He paid monthly hangar rent and the plane was push outside everyday, rain or shine so that the hangar was open for maintenance. When I picked it up, the footwells were full of water. Is wasn’t a good situation.

Tip was it a CTLS or CTLSi? I only recall one CT ever there.

[Tip]

LS